Double, double, toil and trouble…the Government’s first budget has been unveiled on the eve of Halloween, and Nish and Coco are peering into chancellor Rachel Reeve’s cauldron. It’s a spooky episode, so buckle up, we find out if the Halloween budget is the horror show it’s been predicted to be.

 

A seance with economic and political journalist Grace Blakeley helps us break down the raft of tax rises, loosened borrowing restrictions, and investment in public services.

 

But what about the skeletons in the closet? Principal policy advisor at the Joseph Rowntree Foundation Katie Schmuecker drops in to chat about reforms to benefits for sick and disabled people, as well as private renters on low incomes.

 

And finally Torsten Bell, Labour MP and former head of the Resolution Foundation, reveals if he’s going to sleep easy or if he’s worried about any market monsters emerging overnight…

 

Guests:

Grace Blakeley

Katie Schmuecker

Torsten Bell MP

 

Pod Save the UK is a Reduced Listening production for Crooked Media.

Contact us via email: PSUK@reducedlistening.co.uk

WhatsApp: 07494 933 444 (UK) or + 44 7494 933 444 (internationally)

Insta: https://instagram.com/podsavetheuk

Twitter: https://twitter.com/podsavetheuk

TikTok: https://www.tiktok.com/@podsavetheuk

Facebook: https://facebook.com/podsavetheuk

YouTube: https://www.youtube.com/podsavetheworld

 

TRANSCRIPT

 

Coco Khan Hi. This is Pod Save the UK. I’m Coco Khan.

 

Nish Kumar And I’m Nish Kumar. Today, Chancellor Rachel Reeves unveils her much anticipated Halloween budget. We’ll be finding out if it’s the horror show it’s predicted to be.

 

Coco Khan That’s right. And as well as being a big deal for the future of the country, it’s a big moment in history as it’s Labour’s first budget in 14 years and the first delivered by a female chancellor.

 

Nish Kumar To find out what it means for the UK, we’ll be joined by the economic and political commentator Grace Blakeley, the Joseph Rowntree Foundation’s Katy Schmuck.

 

Coco Khan And later I’ll be putting the hard questions to Labour MP towards the back.

 

Nish Kumar So Coco, it’s midday on Wednesday the 30th, the day before Halloween. We sent our producers down to Poundland, which for international audiences, get your mind out of the gutter, especially American audiences. I know how that sounds. It’s a discount shop and we’ve got at least 3.50 pounds of high quality Halloween tots.

 

Coco Khan Yeah, I’m loving it. Someone carved us an actual pumpkin producer.

 

Nish Kumar Made it this year. We should name.

 

Coco Khan It was actually produce Amazing housemate.

 

Nish Kumar Really?

 

Coco Khan Come on. We’ve got to give credit where credit is due. Wow. To May’s housemate.

 

Nish Kumar They really presented that on our WhatsApp group, Facebook. Say it. That’s all I’m saying. Wow.

 

Coco Khan The pumpkins got a scary face, which is fantastic. And then on the back it says PSUK. And I was thinking to myself, if I were to take this pumpkin home and someone asked me what that meant, I mean, I could say, shameless self-promotion is my podcast. Or we could say it’s Pumpkins, Save the UK, but wouldn’t that be really cute?

 

Nish Kumar Okay, welcome to Pumpkin Saves the UK. So we are standing by to listen to Chancellor Rachel Reeves very first budget. And there’s a lot of MPs hoping that this won’t come back to haunt them.

 

Coco Khan We really are doing that. The Halloween puns always go for it. Okay. Some questions about the budget, the spooky budget. Are we about to see some ghosts of chancellors past?

 

Nish Kumar There’s the ghoulish specter of austerity raising its head.

 

Coco Khan Possibly there’s going to be horrifying increases to bus fares.

 

Nish Kumar Are vampiric landlords about to be state.

 

Coco Khan Don’t forget the zombie policies. You know those ones that should have died. But nobody can seem to get rid of them.

 

Nish Kumar Look, the main thing we can take from all of this is that possibly it’s not a great idea to do your budget the day before Halloween and leave. Leave yourself open to newspaper editors. These type of subeditors having a very fun morning tomorrow.

 

Coco Khan Are we stopping? I still got more.

 

Nish Kumar What are your more.

 

Coco Khan Well, I was thinking about, you know, pumpkins and having a good time.

 

Nish Kumar Having a good time.

 

Coco Khan It’s the job of a pumpkin is is a good joke. You already.

 

Nish Kumar Anyway, autumn budgets don’t tend to be a big deal for a government mid-term, but this is a defining moment for the new government. During the election campaign, Labour was desperate to avoid locking themselves into any financial promises. So this is our chance to actually find out what their fiscal agenda is all about. This is a big deal, right?

 

Coco Khan Absolutely.

 

Nish Kumar All through the summer, Kate Summers basically been making the old speech saying things are about to get worse. You know that. Just prepare yourselves for another five years of hardship. There hasn’t been any very specific policy detail. This is the first chance we’re going to get to see of what this Labour government actually looks like.

 

Coco Khan Absolutely. Absolutely. So today’s budget will tell us how much tax will pay. It will tell us how much the Government will spend and borrow and how exactly the Chancellor is changing the fiscal rules. Labour have repeatedly warned us of tough decisions, but have they stocked up on any sweets for the trick or treaters? Let’s find out.

 

Speaker 3 Stability for our country to protect working people. More teachers in our schools, more equipment in our NHS, more funds being built, fixing the foundations of our economy. Investing in our future. Delivering change. Rebuilding Britain. On these benches. I commend those choices and I commend this statement to the House.

 

Nish Kumar To help us unpick Rachel Reeves spooky speech, we’re joined by Grace Blakeley, economic and political commentator, journalist and author. Welcome back to Pod Save the UK, Grace. Great to have you with us.

 

Grace Blakeley Thank you. It’s great to be here.

 

Coco Khan So how are you feeling after Reeves’ speech? Spooky? Terrifying? Horrifying?

 

Grace Blakeley I mean, I guess it depends where you are. Not particularly spooky for me because I don’t have a lot of planned capital gains income or any children in private school. But that can be spooky for some other people.

 

Nish Kumar Major landlord and anti-capitalist author, Grace Blakeley, joins us. So let’s just get straight into it. There’s been so much speculation about tax rises and so much incredible conversations about whether or not landlords constitute working very well. But it’s always a relief to be put out of our misery on the end of this particular thing. So can you spell out what the new taxes are? Gross Because there’s 40 billion pounds of them, which we’re already being told is in cash terms, one of the biggest single tax rises in a single budget.

 

Grace Blakeley Yeah. So there are some some big tax increases in here taken with a pinch of salt, that number, because we just don’t know how much each of these tax increases will raise. What economists say is that there are always behavioral effects, which means that when a tax goes up somewhere, people move in, come around and try it, you know, pay less tax on it. So that’s what we’re potentially going to see with the capital gains tax increase. So capital gains is a tax that you pay on the increase in the value of an asset over the course of time that you own. So, for example, if you have a second home, you have to pay capital gains tax on the increased value of the home after you sell it, and that’s going to go up. But we’ve known about this for a while. So what we’ve seen is a lot of people selling their second homes, poor, poor people ahead of this budget so as to not get caught up in this increase. So that’s a relatively big thing. We’ve also got one of the biggest things is an increase in employer national insurance contributions. So that’s allegedly going to raise 25 billion. So that’s kind of a big tax on on businesses and kind of all businesses across the spectrum ready rather than a more focused one on big businesses. There’s also a little fun, little increase in the fuel duty on private jets, which I thought was quite good. They’re going ahead with abolishing the non dumb tax regime, which again was announced by the Conservatives before the election. So that’s kind of pretty much expected. And we’re seeing some windfall taxes increase as well, which is also potentially quite good. Then there’s the VAT on private school fees and some of the changes to private school taxation. The big shock for a lot of people is that everyone expected her to keep the freezes on the income tax and national insurance thresholds, which basically means the kind of levels at which the tax rates are introduced and start to change. And that’s a pretty easy way to raise revenue because as people’s incomes increase, more people get dragged into paying taxes or paying higher taxes. But she’s saying that those freezes are going to stop off to 2028, which means people will not be as likely to be dragged into upper tax funds. So it’s kind of like a mixed picture here. You’ve got some good stuff in terms of taxing wealth tax and capital gains. And there’s also some kind of some business taxes which are maybe going to affect small businesses, but still some some focus taxes on big businesses as well. Not everything that I think we would have wanted to see when it comes to, for example, wealth, taxation, taxation on on big businesses and fossil fuel companies in the finance sector, but certainly a step in the right direction.

 

Coco Khan Just just paint a picture for me. When you say not everything we could have wanted, what could we have wanted?

 

Grace Blakeley Well, a lot of people ahead of this budget have been campaigning for a wealth tax, like a proper wealth tax. We’ve got a bunch of different not really joined up tax taxes on different forms of of wealth of income from wealth and wealth itself. So capital gains tax is kind of like a wealth tax because it’s a tax on the value of the increase in the value of certain assets. But it’s not really very expensive and it’s not a full tax on actual asset values. And the argument that people have been making and this is lots of NGOs, lots of campaigners, is that we need a tax on wealth to fund decarbonization. This budget has given us not a wealth tax. And it also basically diverted all of the conversation about decarbonization to this weird technology called carbon capture and storage, which is basically pretty much untested and definitely isn’t what environmental campaigners were looking for. So in that sense, you know, it’s not much.

 

Nish Kumar So we never have to hear this fucking phrase again. Can we just clarify that? Labour has managed to keep its pre-election manifesto promise that working people would not be hit by. These changes. Is this a budget that’s geared towards raising tax from people who can afford to pay it?

 

Grace Blakeley I think that’s fair, mostly. Yeah. Yeah, I do think that is largely fair because the pledge was income tax and National Insurance, which is the two main taxes they raised by far the most revenue wasn’t going to change. And that has been capped. And actually in removing that freeze on the thresholds, she’s giving people even a little bit more wiggle room moving into the future. What I would say is that the biggest thing people are going to notice in terms of their living standards actually has less to do with these tax changes and much more to do with public services. And there are some some gaps that I’m sure we can talk about.

 

Nish Kumar Let’s talk about them now. What are the gaps?

 

Grace Blakeley Basically, what we need to think about here is for a long time we’ve been having this debate about what constitutes investment and what constitutes current spending. Now, lots of economists are basically saying the UK has been, you know, had this nonsensical approach to to investment and to spending. It’s been cutting off its nose to spite its face by including lots of different forms of investment in what we count as current spending. Now there’s an argument that current spending needs to be covered by current tax revenues. That’s not really necessarily true, but it’s something that, you know, some people maintain and it certainly will. Rachel Reeves and the Labour Party have been maintaining with that fiscal credibility rule, but investment doesn’t in any way need to be covered by current spending. As long as it’s good investment, it will generate greater tax revenues over the long run. So, you know, you think about building a railway that, you know, brings two cities together, increases trade, creates job opportunities. It raises, you know, tax from business rates, it raises economic growth, etc., and has been talking a lot about the need to unlock growth. She doesn’t really want to increase taxes too much, doesn’t really want to increase public spending too much, even though that’s what we need. She’s saying instead, let’s kind of cut all those issues off and just focus on increasing growth. The way she wants to increase growth is by raising investment. So we’ve got 100 billion, I think she announced in capital investment, which is going to be distributed across a whole different swathe of projects across the public sector. We’ve got some transport investment, some investment in housebuilding alongside this national wealth fund that’s going to be happening at the same time. So the pledges that we have around public services are mostly to do with capital investment. So I think things like, you know, building new hospitals, building new schools, kind of correcting for all of the kind of failures that we’ve seen in terms of capital spending recently. What is less clear is how all the big challenges around current spending. So like staffing costs, yet wages, like all these big gaps that we know exist in the NHS, in schools, how that’s going to be dealt with. I think it’s really important to remember that this isn’t a continuation of austerity. There’s no way you can really make them all cheap.

 

Nish Kumar She said that about 50 times, like it felt, certainly rhetorically. That is the one thing that Rachel Reeves was trying to get across all through the budget.

 

Grace Blakeley Yeah. And like, if that wasn’t true, I would 100% say it right. I don’t think you can argue that this is a continuation of strategy, but it’s definitely not enough to reverse the damage of like a really long period of austerity that we’ve had under successive governments. And that’s going to be her big problem because all these tax changes, fine. You know, if it actually works, people actually pay them. Maybe they’ll reduce inequality a bit. But the thing people are going to notice is, is my wage going up and what’s happening with regards to employment and inflation and what’s happening with regards to public services. The public services picture looks quite mixed. You know, we don’t know whether or not all this capital spending is going to solve the fundamental problems with things like the NHS. And then there were those growth forecasts which we got from the year before, which also didn’t look amazing.

 

Nish Kumar Rachel Reeves is changing the OBE are borrowing rules to change the way the debt is calculated, and hopefully that would allow for more room for investment in public services. How radical is that as a move and does that free up?

 

Grace Blakeley So this again comes back to that thing I was talking about a second ago, which is this debate that’s been going on about current spending versus investment. People have to be really clear in their heads about this divide and what it means. It’s the difference between like building a new hospital, which counts as investment because you’re creating a kind of physical asset you can write. This is worth X amount and put that in a book somewhere, and that adds to the government’s wealth versus hiring a Led a new nurses. Yeah. Which is seen as just current spending. And it makes it a bit easier to finance investment. And that is clearly what we’re seeing coming out now is Rhys making this big push for investment across the board. But it does bring out this other issue, which is like what really counts as investment. Because it’s like building a bridge or a school or hospital counts as investment. Then why does. Is paying the people who are going to work in those schools and hospitals. Not count as investment because ultimately you can build as many hospitals as you like. But unless there is a motivated workforce that is staffing those those buildings, then that just buildings.

 

Coco Khan So in terms of the changes, when I was listening to you speak there and you talked about the government’s assets, my first thought was, I thought we didn’t have many left. We sold them all off, didn’t we? Do you think these changes to the rules could actually expedite the renationalisation projects, you know, maybe taking water companies into public ownership, so on and so forth?

 

Grace Blakeley It would be nice, wouldn’t it? If that was what business could be used for. Though, you know, when you like sell off a bunch of stuff to private investors and then say, we’re going to buy it back. It’s basically just like you’ve given a ton of money to people who had bought this off you and then sold it back to you. And again, this I think, is an important point when we’re talking about this kind of investment driven project that has a lot of this investment is going to be done via the private sector. Now, we know historically that when investment like building schools and hospitals is done by the private sector, it costs more, it often takes longer. And sometimes they build schools that literally collapse or, you know, have other big problems associated with them. And so a lot of that investment money is going to be skimmed off the top and go to private corporations that doing this investment back a half. That’s certainly true when it comes to housing, for example. So Labour’s going to be doing a lot invest in housing, but it’s relying on private developers, which not only means that a lot of that money gets skimmed off the top, it also means that those developers have the incentive to kind of think that housing onto the market very slowly so that it doesn’t affect prices. So that’s again, a limiting factor here. It’s you know, I don’t want to be like overly negative about this budget because it is a change. But I also don’t want to be sitting here saying this is transformational. It’s going to reverse austerity and change people’s lives because that’s not true either. It puts in place maybe the foundations for some sustainable like long term growth. If we see like more growth globally, which is a big question, and if it’s accompanied by much more serious thinking about what they’re going to do on on climate.

 

Coco Khan And obviously much has been made about the changes to national insurance and employer contributions. Would it be fair to say that this is a budget for smaller business rather than big business, or is that too far?

 

Grace Blakeley I wouldn’t say that because there’s a business rate discount that’s coming to an end. So lots of businesses are going to see that business rates go up. There’s also obviously the employer National Insurance contributions, which is like a big bill for a lot of medium sized businesses as well. But we didn’t hear much about, you know, corporation tax and particularly when we’re talking about corporation tax taxes that affect mainly kind of bigger, more profitable businesses, measures to actually make these businesses pay their taxes. Because this has been a problem for a really long time. A lot of big multinational corporations moving money all around the world, moving money to kind of low tax jurisdictions or just saying that, okay, start of low tax jurisdictions and then using that not to pay any tax. Another thing that was interesting was there was a lot of talk from Rachel Reeves about basically making private equity companies pay more tax. They’re able to benefit from these big tax breaks on what’s called carried interest. And and we know that that was a big, big push from the city and from private equity firms, which are a big presence in the city, to say don’t go for the extreme of kind of, you know, removing these tax loopholes altogether. And that’s worked. So they haven’t gone for the most extreme budget of what we think they should be called all together.

 

Nish Kumar There’s one brief positive we should add to this conversation, which is increasing the minimum wage, which is something that has been badly needed in this country.

 

Grace Blakeley 100%. Yeah. And that is it’s a good thing. It was a higher increase than what was recommended by the Living Wage Foundation. I think. So, yeah, that’s that’s definitely a good thing for people on low incomes.

 

Nish Kumar And 18 to 20 year olds not getting reduced rates as well. So that again is going to directly impact young people who are who are on minimum wage.

 

Coco Khan So, Grace, give us your final review of a Rachel Reeves first budget. How did she do? How many pumpkins out of five.

 

Grace Blakeley I would give her three pumpkins out of five.

 

Coco Khan Okay.

 

Grace Blakeley And the reason for that.

 

Nish Kumar Also have we haven’t fully covered what the conversion rate is because does the pumpkins mean that it was really scary or is the pumpkins a postive thing?

 

Coco Khan I would say I would say it’s positive.

 

Nish Kumar Okay.

 

Coco Khan Pumpkin save the UK, we discussed this at the beginning.

 

Grace Blakeley I’m thinking that more pumpkins are better than less pumpkins.

 

Coco Khan More pumpkins are good.

 

Grace Blakeley Yeah, exactly.

 

Coco Khan So 3 out of 5.

 

Grace Blakeley 3 because it could have been a lot less generous. It could have been a lot more generous. It could have gone. In terms of tackling inequality and raising taxes on the rich. And it could definitely have gone farther in terms of reversing the impact of austerity. It definitely could have gone further on climate. But I’m giving the three out of five on the basis of like what we were all expecting from this particular government. And on that basis, you know, I think it’s about middle of the range in terms of what we could have expected from them. Hopefully we’ll be able to put a bit of pressure on them going forward to do some some more things, particularly on, for example, climate and public services. But overall, it’s a fine start.

 

Nish Kumar Grace Blakeley, thank you so much for joining us on Pod Save the UK. And for participating in our pumpkin based rating system.

 

Coco Khan It’s the first time. Might be the last. Thanks, Grace.

 

Grace Blakeley Thanks. Bye.

 

Nish Kumar Now after the break, we’ll be speaking to Katie Schmuecker from the Joseph Rowntree Foundation to talk about what Rachel Reeves really needs to do after this budget to tackle poverty in the UK.

 

Coco Khan So much of the media coverage has been about the wordplay around new taxes on working people. And the focus has been on the upper end of the tax brackets. But what does it all mean for people struggling to make ends meet?

 

Nish Kumar Joining us now to discuss what’s in this budget for those most in need is Katie Schmuecker, principal policy advisor to Joseph Rowntree Foundation, a charity aimed at solving poverty in the UK. Hi, Katie. Welcome to Pod Save the UK.

 

Katie Schmuecker Thanks very much.

 

Nish Kumar We should start by saying there was a shout out for the JRF in the budget. Were you aware that that was going to happen?

 

Katie Schmuecker We were not aware that was going to happen. I have to say that is several budgets in a row which JRF has now had a shout out from the government of the day.

 

Nish Kumar We keep it a big tally.

 

Katie Schmuecker I mean, the budget, when it doesn’t happen, we will know that we have failed. It feels like a very high bar to maintain now.

 

Coco Khan Maybe the budget where it doesn’t happen means you’ve won.

 

Katie Schmuecker I love that. Yes, I’m going with that. Yeah.

 

Nish Kumar How are you feeling? Sort of gut feelings. We all watched the budget together. What’s your gut feelings in the kind of immediate aftermath of watching that speech about what it means for the people that you’re working with most?

 

Katie Schmuecker Well, I mean, every budget is a statement of a government’s political priorities. And the chancellor early on in his speech talked about people need to be able to feel change. And we would absolutely wholeheartedly agree with that. And we would argue that the people who most needed to feel change were those who are experiencing hardship right now and those who are at risk of it. You know, we’ve entering into another winter of cost of living crisis in the first half of this year. We know from work that we do that there were 7 million low income households going without essentials like what the budget did for those people is for us the sort of test that had to be passed. And there are good things in there.

 

Nish Kumar So the thing with the post. Yeah.

 

Katie Schmuecker Okay, great.

 

Nish Kumar Let’s say we get accused mainly by my friend for being always leading with the negative. So let’s start with the positive.

 

Katie Schmuecker Okay. I’m happy to be able to say that because there are some there are some things to be positive about. So the thing that we got a shout out for was a change to deductions policy. This is part of universal credit where some people’s universal credit payments are brought lower by the fact that they are repaying debts of some. So often these are debts have been built up by taking an advance payment whilst waiting for their first universal credit payment, which takes five weeks to be made so that debt gets built up and then clawed back from the basic rate of benefits. Now the basic rate of benefits for those who don’t know 91 pounds per week for a single person, that rate is brought lower still by debt deductions. That really drives hardship for millions of families. And so what the chancellor did is she reduced the maximum deduction from 25% to 15%. That’s a good thing. You’re pleased to see that. We would have liked her to have gone further and created a legal minimum in the system so that no sort of reduction can bring people’s payments down. So think about something like the benefit cap that also can lead to some people living on very low levels of income. So we would have liked her to have gone further. But certainly the deductions policy is a good change. But we also heard really positive things about the national living wage rates, about social housebuilding, a change to a carer’s allowance and how much carers can work before their benefits begin to be removed. So I think there are things there that are positive, but there are also a couple of skeletons in the closet. Okay.

 

Nish Kumar On theme for Halloween.

 

Coco Khan Yeah, healthy for Halloween. So let’s, let’s talk about those. And what were the the skeletons?

 

Katie Schmuecker The two things that we are concerned about are people who have ill health and disabilities and private renters on low incomes. So taking each of those in turn. The chancellor confirmed that the government will not go ahead with the work capability assessment reforms that the previous government announced. So that’s reforms to the benefits for people who are deemed by the system to be not expected to work due to their health condition or because they’re disabled. And she confirmed that they will still make a 3 billion pounds saving over a number of years, but that they will do it in a different way, but has not specified yet what that different way is. Right. So that leaves hanging over people a very substantial cut to benefits potentially for people who are sick and disabled. Now, we don’t know what that looks like. The government has certainly talked about wanting to support people to move into employment. That would be a really positive way of bringing down the benefits bill because if you’re working, then you’re paying out less in benefits. But achieving that level of savings over such a short period of time, we are very unclear quite what that’s going to look like. And I think the the question we would ask the government is how are they going to do that without driving up hardship for disabled people? Because if you look at the work that we do, disabled people, one of the groups who are most likely to be experiencing hardship. Half of all households in poverty have got a disabled family member. Two thirds of people who experienced destitution in the UK are disabled or have a long term health condition. So if you are disabled, if you are unwell, you are much more likely to be experiencing hardship. How is the government going to deliver that level of savings without further driving up that hardship?

 

Nish Kumar So that’s something we need much more detail on very quickly presumably. Talk to me about private renters. The concern there that.

 

Katie Schmuecker One is in a way simpler in the sense that the previous government froze something called local housing allowance, that is housing benefit that goes to private renters. It covers the bottom 30% of rents in a market. The previous government froze that for the foreseeable. This government has not changed that. So that means as we head into next year, the amount of support that people get for their private rents is now dislocated from the reality of rents in their local area. We’re arguing in the run up to the budget that local housing allowance needs to be permanently linked to local rents so that people can be sure that they can keep a roof over their head. Yeah, we have a huge problem with homelessness in this country. Over 100,000 children living in temporary accommodation. People not being able to afford their rent is a really key part of that. The government’s done some good things. On announcing money for social housebuilding. We’ve done some good things with the renters rights bill that is going through Parliament. But there are still loopholes in that bill and now we see that people again will see their support for their housing payments dislocated from the realities of what it costs them to pay for their rent. And that just means, again, further hardship as people have to juggle their budgets to try to cover the rent, to keep a roof over their heads, whilst also trying to put food on the table and keep the homes warm this winter.

 

Coco Khan That that problem of keeping things the same. But fundamentally, society’s getting more expensive and the climate is getting worse. That amounts to a real terms cut as it been other examples of that.

 

Katie Schmuecker Well, I mean, we certainly see that we’re still not yet caught up in terms of the value, the real terms value of benefits. So the government confirmed that it will update benefits by 1.7%. That is the inflation rate from September, which is the standard way of doing that. However, in the budget today it was confirmed the average inflation for this year is going to be 2.5%. So benefits are little bit behind the average rate of inflation for this year. But I think you have to think about the context of that comes on top of which is several years where the cost of essentials like energy and food, the things that you can’t not have, have really driven high inflation, have really skyrocketed. That has hit low income families the hardest. And, you know, that is why we see long queues at food banks, is why we hear stories about people living on one meal a day so that their kids can eat better. These are the things that we hear from people all the time in the work that we do. You know, recently were talking to a group of people with experience of poverty who were telling us that they’ve canceled Christmas this year again, because they just simply cannot afford it. And so there is still this kind of gulf for people, even though the overall inflation is better and some things are improving. Hardship is still being very much experienced now and people can’t just be told to wait for growth tomorrow for things to improve.

 

Nish Kumar And as somebody who can’t drive and spent most of their life on trains and busses, I’m always interested to hear what public transport announcements they have made. There’s some positive sounding announcements in terms of trains in the north of England, particularly around sort of York and Huddersfield and Manchester, which is very useful as anyone who’s trying to travel across the country knows. It is essentially the sort of quest to dump the ring and mount do it.

 

Katie Schmuecker For someone who lives near Huddersfield. I feel that pain on a very personal level.

 

Nish Kumar So that’s positive. But the ditching of the 2 pound cap on bus fares, which is going to rise to 3 pounds at the end of this year, which is implemented by the last government but has not been reversed, Rachel Reeves announced it won’t be reversed in the budget. That’s going to happen to anybody with a lot groups, especially if you travel to and from work by bus every day. It’s an extra 10 pounds a week or 520 pounds a year. Given that there was also an announcement of a freeze in fuel duty. Feels like from a climate perspective, that’s not necessarily where you want to be encouraging people. But also from a kind of perspective, the Joseph Rowntree Foundation, is that another example of working people paying a price that they shouldn’t be paying?

 

Katie Schmuecker Busses are the mode of transport that are used most by low income people. So yeah, that is a. Increase from 2 pounds to 3 pounds as a proportion. That’s huge. People will feel that in their day to day budgets. If you are struggling to hit your home this winter, if you’re struggling to put food on the table already having to find an extra ten or a week just to get to and from work, and that’s before you’ve even done anything else in your life, like go to the supermarket or anything like that. That all adds to the pressure that households are feeling this winter. Actually, not this winter. I’ll be coming in from April.

 

Nish Kumar Yeah.

 

Coco Khan Okay. Katie will give us your review, your final overview of Rachel Rees very first budget. We have introduced a new measure. It’s called Pumpkins. Out of five pumpkins are good. So, yes, more pumpkins are good. Yeah. So, yeah. What do you think? Out of five marks. Out of five.

 

Katie Schmuecker I think I would give it a three out of five.

 

Coco Khan Okay. Interesting.

 

Katie Schmuecker So there are some some measures that where we really needed to see progress, like social housebuilding, like some relief for people who are subject to deductions and universal credit and the extension of the household support fund. Also very welcome. But those two kind of looming cuts, one for private renters and one for people who are in ill health or disabled are really concerning.

 

Coco Khan Katie, thank you so much for joining us on Pod Save the UK.

 

Katie Schmuecker Thanks for having me.

 

Coco Khan Now off the break, I’ll be putting some of the criticisms of the Government’s first budget to Labour MP Torsten Bell to find out where he thinks the pitfalls and the positives really are. Keir Starmer has pledged to embrace the harsh light of fiscal reality in the budget isn’t exactly filling me with joy. But he also promised that good times are ahead. So where exactly are these glimmers of hope and optimism to be found? Joining us now is Torsten Bell, Labour MP for Swansea West and former head of the economic think tank, the Resolution Foundation. Torsten, welcome back to Pod Save the UK.

 

Torsten Bell It’s always lovely to join you.

 

Coco Khan Are you tired?

 

Torsten Bell Thank you for the sympathy. I think that was I think I understand. Alison faux sympathy. Yes, I’ve definitely I’ve definitely had more relaxing days. We did start this morning. But, you know, it’s been 14 years since I was involved in the last Labour Government’s last budget. So it’s nice to have a, you know, Labour budget for change.

 

Coco Khan Well, no, it’s definitely a big day. I mean, for you in your pre politics life. We were saying you’re the ex director of the Resolution Foundation. Normally you would be making statements. Do you think the budget puts the UK onto a good track on fixing some of those fundamental issues?

 

Torsten Bell Well, the boring thing is I’m a Labour MP, so obviously I think that. But more more usefully for you, I think it’s a big budget. It’s the first budget, a new government. Those are always big because they set the direction of travel for the whole Parliament and it is that, but it’s that in a very big way because the Chancellor is making some really big choices. She’s saying we have to make sure that not just our public finances, but also our public services are sustainable. And that doesn’t mean we have to make some tough choices on tax in particular to make sure that we’re not going to have our NHS collapsing, we’re not going to have we’re just going to be punished. And we can’t have prisons that are overflowing. So there are some tough choices on tax. And then a second big choice, which is if we’re going to grow this economy, we’re going to have to invest in it. And so we’re going to do that.

 

Coco Khan So Rachael Rees has said growth is one of the key missions, but growth is a very slippery beast it relies on, particularly in a global economy, it relies on many factors. You know, there could be war, there could be crop shortages, it could be all sorts of things. Do you think.

 

Torsten Bell That you’re really, really perking up today? I thought it was meant to be a fun chat compared to other meetings. So I’m hoping those those things get avoided, although obviously they’re not being avoided around the world at the moment. Go ahead.

 

Coco Khan Well, I mean, that’s what I was going to say. Do you feel confident that these growth targets can be met, given all the instability of the world that we face?

 

Torsten Bell What I would say is, what is our job as a government? Well, it’s to make sure that we get right the things that we can control. And before today, government investment was planned to fall by a third to be cut by a third over the next few years, at a time when we need to be investing to handle the net zero transition, to invest in our transport when all housing to make sure we grow the economy. And by the end of today, that’s no longer the case because of the big choices we’ve made to say we’re not going to have investment, public investment falling in the years ahead. We’re going to be supporting the private sector by making sure the public sector is doing its bit and investing. So that is a big change. And yes, I think we’re doing our bit to make sure we do grow this economy. Doesn’t mean if things easy, it doesn’t mean we’re not affected by the rest of the world. And I know you said at the beginning, you know, talk about growth. It can sound really abstract. The lack of the lack of growth is why wages haven’t risen, you know, significantly haven’t Swansea? They haven’t risen at all since 2010. And that is not what success looks like. So we do have to invest. That is how we get our economy growing and that’s what the budget does.

 

Coco Khan So earlier in the show we were speaking to economist and author Grace Blakeley. We’re also talking to the Joseph Rowntree Foundation’s Katie Schumacher. And they were overall positive. We have a we’ve only just designed it today, but is our new rating system and its five pumpkins? I know, I see.

 

Torsten Bell I see what you did there start really, really subtle.

 

Coco Khan Thank you. Thank you. It’s everyone had a good time. Anyway, they did nonetheless have some criticisms. So Grace was disappointed that the government chose not to implement a wealth tax targeting people with assets over 10 million pounds. You know, presumably that could have gone a way to offsetting some of the less positive pieces of news. For example, like the the cap on the bus fares. I mean, what do you think about a wealth tax? Is that something that Labour could be interested in having a conversation about?

 

Torsten Bell Well, I think if you look at what got announced today, then it’s a significant improvement in how we do tax wealth. We do have wealth taxes, capital gains tax, we have inheritance tax and we have others. And on both of those those two, we have set out significant reforms today to make them better wealth taxes. My personal view is that the priority is to make sure you’ve got better will taxes of the ones you’ve got, because those are the ones that will actually deliver us money and they are doing a very bad job in lots of ways at the moment. And there’s been big changes today, higher capital gains, removing some of the rates, but taking on the likes of shares, changing some of the releasing the capital gains tax system and also on inheritance tax, making sure the system’s fairer and treats different kinds of estates more suddenly than it does today. Those are all very important, big, good changes that will make the country a fairer place, but they’ll also raise revenue because we not doing we’re not raising taxes to fund. We’re raising taxes because our public services are crumbling. And that’s what we need to do.

 

Coco Khan And. Also want to put to you some criticism from the giraffe. So Katie Schumacher was concerned about how the budget will bring down the benefits bill without increasing hardship for disabled people. I do appreciate that. What’s going to happen with benefits is not been laid out today, and it’s still a work in progress, but just is that this is not an impossible situation. Cutting the welfare bill and also providing good standards for the most vulnerable. I mean, how do those two things even work together?

 

Torsten Bell Well, the major change on the benefits system today is steps to tackle fraud, which which are mainly from gangs. I think people, when they talk about fraud, they think about benefit fraud in terms of kind of what individual behaving badly. But the big fraud problems are about gangs trying to access what is now a highly digital system. So we are stepping in to make sure we have better access to bank account data, to make sure that we can crack down on benefit fraud. That’s the right thing to be doing and that will save quite significant sums of money. There aren’t of the reductions in benefit spending that are a new in this budget. There is open debate, which I think is probably what you’re referring to about what do we do about the fact that the disability and ill health benefits bill is has been rising very significantly? Remember that under the Tories it was forecast to rise 50% by 2028. So a very significant increase in spending. None of us want to see that, not because for the Treasury’s perspective, just it costs lots of money, but because, well, sitting behind that is lots of people who are one too many people in Britain the second ill, but secondly, a benefits system which is saying to those people, you know, show us you’re too sick to work rather than killing you. And we’re not in a good place on that. And what the Department for Work and Pensions, what this can do, the secretary of state said is we’re going to be looking at that and bringing forward reform. It’s not about just saying here on day one is a kind of cuts package. It’s what is it? What are we going to do to make the system work better? Yes, for the government, but more importantly, for those who are sick and disabled.

 

Coco Khan Can I just thought this is just a personal fair of mine. I keep hearing about the, you know, inclusion of AI in some decision making, you know, DWP. But in other areas, obviously, we just have the post office scandal. It’s No. One checking this. This feels a bit scary to me. The the use of AI, you know, this new technology that we’ve had, there’s so many concerns about it, racial biases, things like that. I mean, is this something that’s definitely in motion? Can I stop it now, please? Can I get the brakes on the.

 

Torsten Bell Boston memo on to make it all stop? Look, I know you’re going to stop the use of AI in different parts of public services, but what does matter is that it’s used well and people are very aware of every piece of red, the same data which we’re talking about in terms of how it how it’s done in the wrong way, you can reinforce biases that already exist in the world through the use of AI people in government who would do it, who are perfect, that are very aware of those dangers. Partly that’s obviously make sure you don’t do that. But it’s also just more generally, we think before you jump overall, I wouldn’t say the danger is I’m not seeing across the public sections ways lots of people rolling out widespread use of AI when it comes to actual decision taking, because that’s where most of the worries come from. This you’re rightly pointing out I’m going to pass on your message.

 

Coco Khan Please, please pass on the message. Just let them know. Listen, AI sounds cool, but machines aren’t always right.

 

Torsten Bell Machines are not always right.

 

Coco Khan Write it down. I can send you a copy of The Terminator. Thanks. Now, finally this afternoon, the financial markets have been a bit of it’s been a bit of a ride on the back of the budget. I’m not going to ask you to do a pumpkin writing, don’t worry. But do you think you’ll sleep well this Halloween or are you worried about any market monsters?

 

Torsten Bell My God. I’ve got to forgive you for that terrible line. Look, that’s actually a really easy one for me because I’m going to have the best night’s sleep I have had after a budget in years. That’s partly because the budget’s really good, but mainly because in my last job, I used to have to stay up until 3 or 4 in the morning writing a report analyzing the budget. And that’s no longer my job. So all my thoughts and prayers are with everyone at the Resolution Foundation who will be staying up tonight, overnight, doing what I’m going to be doing. Coco is sleeping and trying to forget your terrible, terrible jokes.

 

Coco Khan Thank you. No haunt you in your dreams, but terrible jokes. Well, you know, I hope you do get some rest. And thank you for talking to us Torsten.

 

Torsten Bell Thank you for having me.

 

Nish Kumar So we’ve really gotten into the nitty gritty of the government’s first budget. But zooming out for a minute, what does it all add up to? Do we think this is a sort of manifesto breaking budget driven by balancing the books, or is it one where the Labour Party has seized control and prioritize public services? Or do we think, based on what Katy and Gray said, it’s actually something that slightly falls in the middle of those two things.

 

Coco Khan I mean, having listened to Casey Gray, it seems to me that that is definitely the case. It’s hard for me to know exactly what the criteria should be for a budget. You know, should it be stability? Should it be growth? Where should it be? I mean, Joe McDonald wrote in The Guardian that there are two purposes of a budget. The questions that the chancellor should be guided by, what society do you want to create and what economic measures will aid that creation? So looking at what we’ve laid out, what society does, you want to create? I’m not convinced. It’s one that’s like much more equal, where there’s a complete absence of poverty, but it’s more that it’s less extreme. That’s how it felt anyway.

 

Nish Kumar Yeah. I mean, I think, listen, there was a constant stress that this was not a return to austerity and that they would be meeting their manifesto commitment of not raising taxes on working people, which I think they certainly can make the case that they have done. I think, as with a lot of the things that we’ve seen so far, it is essentially it’s everything’s been an exercise in expectation management. And actually probably the expectation management has actually been pretty good going into this budget because I think there was a sense that this might be a sort of redraft of austerity. And, you know, certainly Grace was very keen to stress that she didn’t feel that it was that. And I she didn’t strike me as a person that would have held that she felt she felt that was a perspective that needed being said. I will say that I think probably this is Rachel Reeves. One shot at blaming everything on the Conservative Party. I think that the Labour government has made a sort of law of how about inheriting an absolute mess? I think this is the one window where they can really lean on that. I think from next year onwards, people are going to expect some sort of delivery. People are going to expect to feel the benefits. Yeah. That Rachel Reeves is promising that will come through. And that test is one that sort of remains to be seen whether this budget can pass.

 

Coco Khan So obviously, you gave a very complex answer that had lots of nuance in it. But let’s just reduce all of that to pumpkins. How many pumpkins are you going to give Rachel Reeves’s first budget speech?

 

Nish Kumar Well, listen, we’ve talked to some experts. I see no reason to deviate from that. No. I will say simply, three pumpkins out of five. Yeah. What are you going to go with?

 

Coco Khan I will also go with three pumpkins out of five. So that is our official analysis.

 

Nish Kumar Will you? You’ll be seeing it. Here we go. A budget, a lot of budget coverage. I challenge any of the other so-called professional news outlets to write the budget on a pumpkin scale.

 

Coco Khan Yeah, exactly.

 

Nish Kumar Where are you? Sky News. Where are you? BBC News. Where are you? Actually, GB News might be doing something like this.

 

Coco Khan So looking ahead to next week’s show, there is some very large news coming from America that it’s a success all internationally.

 

Nish Kumar It just feels weird to be talking about anything else, given the potential Matilda is having for all of us next week.

 

Coco Khan Yes. The American election next week.

 

Nish Kumar Yeah. Fuck. You know, I just, you know, I don’t know. It’s very stressful. Who knows what the fuck is going to happen? But Crooked Media is going all in with daily coverage of every race, every count and every legal curveball.

 

Coco Khan Yeah, you should definitely check out their daily pod. It’s called What a Day. It’ll be fresh in your feeds daily with Jane Coaston breaking down. What you need to know in 20 minutes.

 

Nish Kumar Pod Save America will release new episodes with in-depth analysis of the latest news every morning until the race is called.

 

Coco Khan And if former U.S. President Donald Trump’s campaign decides to push the boundaries with their legal challenges, Crooked’s go to legal experts from Strict Scrutiny will stop by some shows across the network to unpack the breaking news. Plus drop bonus episodes on their feed for those who want more.

 

Nish Kumar You can find all of this on your favorite podcast platform and YouTube.

 

Coco Khan Well, I mean, given the severity of that, it sort of sounds strange to mention, what will be the big news here, which is the Tory leadership race. Doesn’t it?

 

Nish Kumar Yeah, it really does. Real shame they couldn’t. Not for Halloween, because that is an absolute parade of monsters. That leadership contest has been an absolute parade of where wolves and zombies and vampires. Will it be Robert Jenrick or Kemi Badenoch? Will it be salmonella or E.coli?

 

Coco Khan Tune in next week to find out. Anyway, thanks for listening to Pod Save the UK. We want to hear your thoughts. Email us at PSUK@ReducedListening.co.UK.

 

Nish Kumar Don’t forget to follow us at Pod Save the UK on Instagram, TikTok and Twitter. And if you want more of us, make sure you subscribe to our YouTube channel.

 

Coco Khan Pod Save the UK is a Reduced Listening production for Crooked Media.

 

Nish Kumar Thanks to senior producer James Tindale and assistant producer May Robson.

 

Coco Khan Our theme music is by Vasilis Fotopoulos.

 

Nish Kumar Thanks to our engineer, Ryan MacBeth. The head of production is Dan Jackson.

 

Coco Khan The executive producers are Anoushka Sharma and Madeleine Herringer. With additional support from Ari Schwartz.

 

Nish Kumar And remember to hit subscribe for new shows on Thursdays, on Amazon, Spotify or Apple or wherever you get your podcasts.